Facebook purchase raising eyebrows

Thursday

Mar 27, 2014 at 12:01 AM

By BARBARA ORTUTAY

and MICHAEL LIEDTKE

AP Technology Writers

NEW YORK -- Facebook's latest multibillion dollar acquisition of virtual reality headset maker Oculus is prompting some people to wonder if CEO Mark Zuckerberg is already living in an alternate reality.

Longtime technology analyst Roger Kay wonders whether Zuckerberg "is nuts" for agreeing to pay $2 billion for Oculus less than five weeks after inking a deal to buy WhatsApp for $19 billion.

Oculus doesn't have a consumer product on the market, just the promise of bulky virtual reality goggles that have generated huge buzz in the video gaming community.

Zuckerberg, for his part, sees long-term implications in the technology, for communication, entertainment and beyond. He was right about mobile, and he's created the world's biggest online social network.

So, is he looney, or visionary?

"Mobile is the platform of today and now we're starting to also get ready for the platforms of tomorrow. To me, by far the most exciting future platform is around vision or modifying what you see to create augmented and immersive experiences," Zuckerberg said on a conference call discussing the deal. "Today's acquisition is a long-term bet on the future of computing. I believe Oculus can be one of the platforms of this future."

Beyond sticker shock, the WhatsApp and Oculus deals -- along with the Facebook's spurned offer to buy SnapChat for $3 billion-- have raised questions about Facebook's ability to innovate on its own. Some of the company's most high-profile products, such as the SnapChat-like Poke, the messaging service Facebook Messenger and Home, have flopped. The jury's still out on Paper, an that lets users read news, Facebook feeds and more.

"Facebook I don't think has the best innovation strategy," says Gartner analyst Brian Blau. "So far it's been 'move fast and break things.' Move fast is good, but break thinks, may not be."

Blau calls the Oculus acquisition "kind of out of left field."

But there were questions about Facebook's acquisition of Instagram back when it offered $1 billion for the photo-sharing app (the final purchase price was $715 million) in April 2012 -- and Instagram "turned out fine," Blau points out.

Facebook said Tuesday that Instagram has 200 million users, up from 30 million at the time it agreed to buy the company.